Hurricanes and the stock markets soar, roar and disappoint too but one thing is certain ---you just never know
By Dian Vujovich
My heart goes out to all along the East Coast who experienced Hurricane Irene. Especially those first-timer’s who never before have lived through the days of hour-by-hour, second-by-second weather reporting in anticipation of not knowing precisely what’s coming ahead—if anything.
The not-knowingness of a hurricane is enough to drive a newbie crazy much the same as making one’s first time stock purchase can be. Or, obsessively watching the stock ticker. Both can be nerve-wracking beyond belief.
But if, perhaps, you don’t think storms in the sky and those on Wall Street have much in common, indulge me for a minute here as I draw a couple of parallels between hurricanes and stocks.
For openers you never know what a hurricane is going to do, which direction it will turn, whether it will keep on going, growing or diminish in size. Or, where it will strike and/or when. Stocks do that too.
Even after an investor has done their homework— like researched the company and looked at things like its balance sheet, company debt, sales, price-earnings ratio, dividend payout if any, what future sales look like and read all the footnotes in its corporate report— and still decides to invest she never ever knows what its stock price will do from that initial per share purchase price on forward: It might go up. It might go down. It might be a dud and remain flat. The company could go broke or be bought out. You never know.
Once you’ve heard a hurricane is headed your way, there is work to do too. But instead of corporate research you’ve got to ready your house, prepare your family and pets, buy groceries, flashlights, batteries, make sure you’ve enough meds to last a week or so and water, too. And after all of that, then finally decide if you’re in or you’re out: Are you staying or evacuating? No matter what that decision is you still never know what’s going to happen.
Then there’s the money.
I’m not sure how much money the retail, grocery and drug stores rake in before a storm, or afterwards, but there’s a definite cha-ching factor that goes on from individuals who probably aren’t thrilled having to spend hundreds on hurricane preparations. Visit home improvement stores like Home Depot and bulk sellers like Costco and one can only imagine what has been rung up in their tills.
While there really isn’t a cost associated with purchasing individual stocks before you invest, unless you’re working will a fee-based planner who charges for their time and investment advice, the big nut expense here is in the cost of how many shares were purchased at whatever price.
And yes, while a hurricane isn’t an investment, exposure to hours of its unrelenting winds and the results thereafter can have a hugely devastating long-term effect. Perhaps more, if not as much, as the damage an extended bear market can do to your long-term retirement portfolio.
So there you have it. More in common than you may have thought.
BTW, hurricane season has three more months to go this year, September is historically a crappy one for the stock market and October too. But don’t let that worry you. It is, after all, a “You never know” world we all live in.
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